Question: Classic Carpets Inc. has completed its monthly inventory count for luxury rugs and recorded the following information for ending inventory: 500 units 100 percent complete,

Classic Carpets Inc. has completed its monthly inventory count for luxury rugs and recorded the following information for ending inventory: 500 units 100 percent complete, 400 units 50 percent complete, and 200 units 25 percent complete. The company uses a process costing system to determine unit cost. Why would unit cost be inaccurate if 1,100 units were used to determine unit cost?

Requirement:

Calculate the equivalent units of production for Classic Carpets Inc.
Discuss the impact of incomplete units on the accuracy of unit cost calculation.

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